Stelios Demetriou: A key goal is to put Cyprus on the map for Japanese businesspeople

Stelios Demetriou, President of the Cyprus-Japan Business Association, talks about efforts to further strengthen links between the two countries and raise greater awareness in Japan of investment opportunities in Cyprus.

What are the main aims of the Cyprus-Japan Business Association?

The Cyprus-Japan Business Association aims to foster economic and trade relations between Cyprus and Japan. Our objectives include promoting and expanding business interactions, establishing social connections between professionals from both countries and stimulating investment opportunities. A key goal is to put Cyprus on the map for Japanese businesspeople, overcoming cultural and language barriers to increase trade and cooperation. The Association also seeks to become a central hub for government and business community interactions related to Japan, to facilitate the drafting of a Double Tax Treaty and leverage the EU-Japan Economic Partnership Agreement.

How would you describe business relations between Cyprus and Japan as they stand today?

Japan currently ranks among the largest developed economies globally with a GDP of €3.9 trillion. Despite this, the trade volume between Cyprus and Japan remains relatively low. According to Japan’s Ministry of Foreign Affairs, Cyprus’ imports from Japan in 2023 amounted to €692 million while its exports stood at just €1.3 million. The relatively low value of imports/exports of goods and services between the two countries showcases a significant opportunity for growth. It is a strategic opportunity for both countries to deepen their economic partnership and increase bilateral trade and investment.

The relatively recent establishment of the Cyprus-Japan Business Association, alongside the opening of the Embassy of Cyprus in Japan (2018), marks a proactive step towards fostering closer economic ties. These developments, along with various business agreements, are instrumental in building a stronger bilateral framework. The Association is dedicated to enhancing these relations by promoting Cyprus as an attractive investment destination and facilitating greater access to the Japanese market.

While the current state of business relations between Cyprus and Japan may be characterised as ‘untapped potential’, the groundwork laid by recent diplomatic and business initiatives suggests a promising future. With a strategic focus and collaborative efforts, the Cyprus-Japan Business Association can unlock new opportunities for economic growth and new partnerships between the two countries.

What do you consider to be the most lucrative sectors for any future Cyprus-Japan cooperation?

The Association has identified a number of priority sectors for enhanced cooperation, including shipping/ship management, ICT and professional services. These are areas in which Cyprus has developed strength and expertise and currently enjoys a positive position. Combined with Japan’s technological expertise, these sectors offer lucrative opportunities for joint ventures, knowledge exchange and mutual economic growth.

What more can be done to promote greater awareness of investment opportunities in Cyprus among potential investors from Japan?

To promote awareness of investment opportunities in Cyprus, we need to implement targeted campaigns. These should be based on a thorough analysis of the market to confirm key opportunities and identify suitable potential partners as well as the best go-to-market approach. A list of associates on the ground must also be developed to support this targeted outreach as well as an online media campaign to best introduce Cyprus and its merits to the Japanese investment community. We should also plan sector-specific meetings and send business delegations to Japan, as opposed to more general delegations. Additionally, the formation of working groups and a partnership council consisting of prominent businesspeople from both countries, who would act as ambassadors and promote direct networking, might help in this effort.

How can other large Japanese companies be encouraged to follow the example of MUFG Investor Services and create a presence in Cyprus?

Encouraging more Japanese companies to establish a presence in Cyprus requires a multifaceted approach. To a certain extent, it is also linked to the country’s wider efforts aimed at improving its Foreign Direct Investment (FDI) attractiveness. Streamlining bureaucratic processes and offering incentives can significantly enhance Cyprus’ appeal as a business-friendly destination. By simplifying administrative procedures (e.g. the acquisition of work permits) and providing financial and other incentives (such as tax breaks), Cyprus can exploit its competitive advantages and position itself as a destination of choice for Japanese FDI, promoting the country’s EU membership, high standard of living, security, strategic location, etc. This is also in line with the findings of EY’s Country Attractiveness survey, which evaluated our FDI competitiveness compared to other FDI destinations. According to the same survey, the last decade has seen significant developments in FDi in key sectors of the economy (such as ICT, Education, Health and Hospitality), with the entry of key international players in the local market. We can capitalise on successful case studies like that of MUFG Investor Services to further promote the benefits of investing in Cyprus. Such international players can act as ambassadors by sharing their positive experiences and the benefits they have acquired.

Additionally, through the Association, Cyprus can establish support services to assist Japanese companies with market entry, legal and financial consultation, and cultural integration. By providing a supportive business/partner ecosystem, Cyprus can draw Japanese investment opportunities as well as foster long-term business relationships.

(Photo by TASPHO)

(This article first appeared in the 2024 edition of The Cyprus Journal of Wealth Management, commissioned by Eurobank Cyprus and published by IMH. Click here to view the article. Click here to view the entire magazine online.)